Energy Standing charges

As new bills start 1st April the daily standing charges inevitably go up. I question whether providers are profiteering in some way

Charges vary per provider and there appears nothing describing exactly what it goes towards given the above comments. Are there any requirements to do this or just a case of shopping around?

There are no requirements on the energy companies to justify their standing charges to their customers, but I believe they do have to be pre-approved by Ofgem, in regard to their standard variable fixed tariff at least.

Ovo 11% rise, but the unit price has gone down, so they reckon I will be better off. Hmmm…

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Since I started this post i’ve been put onto variable tariff by Octopus for next three months. Previous was one year fixed and daily electric standing charge was about 20p a day. This tariff 40p a day 100% rise!!. I rang Octopus and asked to explain what the charges are for and they said mostly the dno - fair enough, but some on “admin charges”. They could/would not evidence exactly what those admin charges are but I also said that if these are fixed costs then presumably the sc is the same over all tariffs. Answer , no, they vary by tariff so my question was to prove that they are not using this as a hidden element to make a bit more profit. Again the agent couldn’t answer that, not really his fault. I also rang Which? To investigate but was surprised that they weren’t interested and said to contact ofgem

It doesn’t matter what the direct and variable charges are.
As long as the the average household (with average consumption) doesn’t pay more than the price cap, everything is fine.

That’s one of many common common misunderstandings actually. The price cap isn’t £2500 for the average household with average usage. The price cap applies to the unit costs themselves.

The variable costs have to be lower than the price cap set by Ofgem. And the fixed costs have to be justified to Ofgem, again against a price cap. The fixed costs vary depending where you live because the cost of delivering the energy is different in different parts of the country.

The £2500 number is just what it comes out to costing an average household with average usage over a year. It’s not the price cap itself.

My understanding is that the increase in the price of the standing charge is to cover the debt of the failed energy companies.

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What on earth makes you think that?

Because the cost of supplier failure is funded through standing charges.

Last August Ofgem considered moving this cost out of standing charges and onto the unit price of electricity but decided against it.

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Ok apologies. It does look that way. But I don’t see how standing charges fund the costs of failed energy companies….

I thought it was a form of ‘compensation’ for energy companies who took on the old customers of those who’d failed spread across the whole customer base not just those who were ‘moved’.

That may be the wrong interpretation but I think a one off daily increase is preferable to them adding a bit extra to each unit used.

Same, SC up to over 60p/day for electric, tiny reduction in unit price.

I use the analogy of a new car. 10 years ago you would get a full size spare wheel, 1l can of oil and full tank of fuel. Now half tank, no oil, no spare wheel. All of course adds the margin. Whilst nobody is happy at energy rises I would simply like them to justify (perhaps legally), what these hidden costs go towards.

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20% of the standing charge funds the supplier of last resort scheme which is the scheme Ofgem use to rehome cusomers of failed suppliers. Bascially we’re all paying the price for failed regulation.

Also there are fixed network costs, policy costs (green levies) and the funding of the warm home discount rebate that consitute parts of the standing charge.

All these of course hit the poorest as everyone pays this, regardless of consumption.

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